Why Is Chevron Spending Millions on a Municipal Election?

One company may not be able to fight city hall, but one company appears to be trying to buy it. Thanks to California's strong campaign money disclosure requirements voters and shareholders know that Chevron has poured over $2.9 million into the mayor's and certain city council races in Richmond, CA. This raises a host of questions including whether this use of corporate money is what shareholders had in mind when they bought Chevron stock. This also raises the question of what the proper role is for corporate money in a democracy.

Chevron has a yen for political spending. In the 2012 federal election, Chevron (ticker CVX) was the publicly traded corporation that spent most money in politics under their d/b/a (doing business as) name. They gave $2.5 million to the Congressional Leadership Fund. In the context of the 2012 races, they were in good company, but they out spent other public firms. Clayton Williams Energy (ticker CWEI) gave $1 million to American Crossroads Super PAC. Chesapeake Energy (ticker CHK) gave $250,000 to Make Us Great Again Super PAC. Scotts Miracle Gro (ticker SMG) gave $200,000 to Restore our Future Super PAC. CONSOL Energy (ticker CNX) and Hallador Energy (ticker HNRG) each gave $150,000 to Restore Our Future Super PAC.

For the last quarter of a century, Chevron has not been shy about getting into politics. According to www.opensecrets.org, Chevron spent over $16 million in federal elections in the past 24 years and according to www.followthemoney.org, Chevron spent over $68 million in state elections the past 26 years. And the Chevron political money is still rolling in, including a new $1 million reported in the third quarter of 2014 that was given to the Congressional Leadership Fund.

When studying Chevron’s predecessor corporation Gulf Oil in my examination of Watergate, I found that Gulf Oil got caught red handed giving an illegal $100,000 to Nixon’s Committee to Reelect the President or (CREEP) in 1972 through its colorful Vice President for Governmental Relations Claude Wild.

Later the SEC realized on closer examination that Gulf Oil had spent at least $5.4 million in political contributions and related expenses, much of it in violation of law at the time. Gulf Oil was the biggest political spender of hundreds of publicly traded firms that the SEC examined in the 1970s. Gulf Oil merged with Standard Oil of Southern California to become Chevron in the mid 1980s.

But the Richmond mayor's race this year is a different kettle of fish. First it’s not a national or even a state race. Then there is the issue of scale. Richmond, CA, a town north of San Francisco, only has a population of 107,000 and the median income is less than $52,000. Meanwhile Chevron has more money running through it than most nations do.

So why is Chevron being such the schoolyard bully in this little race?

Because Chevron owns a refinery in Richmond, and, according to a company e-mail statement, the oil company “supports City leaders who share our commitment to policies that foster an economic environment where business can thrive and create jobs to make Richmond an even more attractive place to live.”

But it’s likely there are other, more prosaic, reasons for Chevron’s largesse. Richmond has a history of standing up to Chevron after its refinery exploded in1999 and again in 2012. Richmond is suing Chevron over the more recent explosion. As the Contra Costa Times noted, “The city’s lawsuit…could cost the company hundreds of millions in damages, and a new council majority sympathetic to Chevron could squelch the suit or pave the way for a settlement more favorable to the oil giant.”

This raises the ugly possibility that the company is trying to influence more than the election; that it may be trying to impact the legal case which raises serious rule of law issues.

The candidate that doesn’t have Chevron’s blessing, Tom Butts has a campaign chest of roughly $22,000. Chevron is spending more by many orders of magnitude. Given the small war chests of its opponents, the level of corporate spending in Richmond seems like overkill. To shareholders it might seem like something more pernicious: a waste of corporate assets.

While California allowed corporate spending before Citizens United, ever since this Supreme Court case, good government advocates have warned that corporations could have a distorting impact especially in small local elections that used to be sleepy low dollar affairs. Richmond seems to be that nightmare come true.

We know about Chevron’s recent spending in Richmond because California has particularly good campaign finance disclosure laws including disclaimer requirements that require political spenders to list their top two funders on campaign materials.

Efforts to pass a national law modeled on California's approach called the DISCLOSE Act failed in Congress several times in a row including once by a single frustrating vote. Since Congress can't get the job done, many shareholder groups have turned their attention to the SEC to seek more disclosure. Indeed over a million people have asked SEC for a new rule on corporate transparency so that investors know across the board where corporate political money is going-- especially in the states with less transparency than California.

The corporate spending in Richmond has caught national media attention and has largely been met with revulsion. As one resident of Richmond put it in an L.A. Times editorial, “Chevron is trying to buy my vote.” Is this reputation that Chevron really wants for itself? At some point, this can't be good for business or for the democratic process.

The views expressed are the author's own and not necessarily those of the Brennan Center for Justice.